Question

preferred stockholders must receive their stated dividends prior to the distribution of any earnings to common stockholders and bondholders true false

Answer 1

Answer: False

Step-by-step explanation:

While it's is true that Preferred Shareholders should receive their stated dividends before Common Shareholders do, the same cannot be said for Bondholders.

Bonds are a type of debt and as such get preferential treatment to a company's income. Bond interest is paid before any dividend to any class of shareholders. Even in the event of a Liquidation, Bond holders are paid first before Preferred Shareholders.